Correlation Between Johnson Johnson and Lexaria Bioscience
Can any of the company-specific risk be diversified away by investing in both Johnson Johnson and Lexaria Bioscience at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Johnson Johnson and Lexaria Bioscience into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Johnson Johnson and Lexaria Bioscience Corp, you can compare the effects of market volatilities on Johnson Johnson and Lexaria Bioscience and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Johnson Johnson with a short position of Lexaria Bioscience. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Johnson and Lexaria Bioscience.
Diversification Opportunities for Johnson Johnson and Lexaria Bioscience
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Johnson and Lexaria is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Johnson and Lexaria Bioscience Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lexaria Bioscience Corp and Johnson Johnson is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Johnson Johnson are associated (or correlated) with Lexaria Bioscience. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lexaria Bioscience Corp has no effect on the direction of Johnson Johnson i.e., Johnson Johnson and Lexaria Bioscience go up and down completely randomly.
Pair Corralation between Johnson Johnson and Lexaria Bioscience
Considering the 90-day investment horizon Johnson Johnson is expected to under-perform the Lexaria Bioscience. But the stock apears to be less risky and, when comparing its historical volatility, Johnson Johnson is 12.07 times less risky than Lexaria Bioscience. The stock trades about -0.13 of its potential returns per unit of risk. The Lexaria Bioscience Corp is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 70.00 in Lexaria Bioscience Corp on September 1, 2024 and sell it today you would earn a total of 10.00 from holding Lexaria Bioscience Corp or generate 14.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Johnson Johnson vs. Lexaria Bioscience Corp
Performance |
| Timeline |
| Johnson Johnson |
| Lexaria Bioscience Corp |
Johnson Johnson and Lexaria Bioscience Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Johnson Johnson and Lexaria Bioscience
The main advantage of trading using opposite Johnson Johnson and Lexaria Bioscience positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johnson Johnson position performs unexpectedly, Lexaria Bioscience can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Lexaria Bioscience will offset losses from the drop in Lexaria Bioscience's long position.| Johnson Johnson vs. Crinetics Pharmaceuticals | Johnson Johnson vs. Enanta Pharmaceuticals | Johnson Johnson vs. Amicus Therapeutics | Johnson Johnson vs. Connect Biopharma Holdings |
| Lexaria Bioscience vs. Lexaria Bioscience Corp | Lexaria Bioscience vs. Lixte Biotechnology Holdings | Lexaria Bioscience vs. GeoVax Labs | Lexaria Bioscience vs. Reviva Pharmaceuticals Holdings |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
Other Complementary Tools
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |